Prime Minister Hun Sen yesterday praised his administration for bringing political and social stability to the Kingdom, improving the business climate and turning the country into an attractive investment destination.
Speaking during the 40th anniversary of the victory over the Khmer Rouge at Phnom Penh’s Olympic Stadium, the premier said that the government, currently ruled by his own party, the Cambodian People Party (CPP), has transformed the country since the collapse of the Khmer Rouge regime into a nation that attracts billions in foreign direct investment (FDI) every year.
“Peace, security and political stability over the last two decades has allowed Cambodia to develop economically and socially,” Mr Hun Sen said. “Cambodia is now considered by local and foreign investors, as well as many international financial organisations, as a very good and competitive place for business and investment.
The premier said that the country is considered the sixth fastest growing economy in the world.
“Our gross domestic product (GDP) increased from just $3.64 billion in 2000 to $24.6 billion last year. We are now in the process of evolving from an agriculture-based economy into one based on industry and services,” Mr Hun Sen said.
“A few years ago we had a very high poverty rate, but now we are a rice-exporting nation and have become one of the fastest growing economies in the world.”
Aun Pornmoniroth, the Minister of Economy and Finance, recently told Khmer Times that trade has been instrumental in achieving a 7.3 economic growth rate in 2018.
He said Cambodia now exports to 147 countries, with international shipments representing more than 60 percent of the country’s gross domestic product (GDP). At the same time, Cambodia now buys from 135 countries, with exports last year valued at $13 billion.
In a report issued last week, the National Bank of Cambodia (NBC) forecasted robust economic growth in 2019, just marginally lower than last year.
It said that this year the inflation rate will remain at 2.6 percent, while foreign reserves are expected to reach $11.3 billion.
Uncertainty regarding Cambodia’s EBA scheme with the EU and the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are listed by NBC as possible risks to achieving 7 percent growth.
As for internal risks, one of the biggest worries is an overreliance on the construction sector for growth, which is also burdened by high credit growth. Other internal factors are high production costs, small economies of scale, limited access to power, the high cost of electricity and a minimum wage in the garment sector that continues to increase every year.
“To face these threats, the Central Bank will work alongside the government to reform and diversify the economy, provide a favorable investment environment, and develop the economic sector efficiently,” the report noted.
“NBC will work to strengthen trust and develop the banking system efficiently while stabilising prices in line with our development strategy for the financial sector for the years 2016–2025.”